420worksheet8 - steady-state levels of income per worker...

ECON 420 – 002 & 004Worksheet 8Economic Growth 1.Country A has the production function:Y=F(K,L)=K1/2L1/2a.What is the per-worker production function? b.Assume that 5 percent of capital depreciates each year and the country saves 20 percent of output each year. Using your answer from part(a) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker. Find the

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Unformatted text preview: steady-state levels of income per worker and consumption per worker. c. Suppose that the initial capital stock per worker is 2. What are the levels of income per worker and consumption per worker? Remembering that the change in the capital stock is investment less depreciation, use a calculator or a computer spreadsheet to show how the capital stock per worker will evolve over time in the first five years....
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